Project – A CRITICAL EXAMINATION OF THE BENEFIT OF E-NAIRA PLATFORM TO NIGERIA CITIZENS
CHAPTER ONE
INTRODUCTION
1.1 Background Of The Study
According to the Financial Action Task Force (FATF 2014), digital currency is a digital representation of value that is digitally transmitted while functioning as a medium of exchange, unit of account, and store of value, and it works exclusively by agreement among virtual currency users. Similarly, The European Banking Authority (2015) defined virtual currency as “a digital representation of value that is not issued by a central bank or a public authority, is not necessarily attached to a fiat currency, but is accepted as a means of payment by natural or legal persons and can be transferred, stored, or traded electronically.”
The introduction of the e-Naira, Nigeria’s digital currency, has sparked considerable interest and debate among scholars, policymakers, and the general public. The Central Bank of Nigeria (CBN) launched the e-Naira in October 2021, positioning it as a tool to enhance financial inclusion, reduce transaction costs, and improve the efficiency of the monetary system (Central Bank of Nigeria, 2021). This literature review critically examines the potential benefits of the e-Naira platform to Nigerian citizens, drawing on various academic sources and empirical studies.
One of the primary benefits of the e-Naira is its potential to enhance financial inclusion. According to a report by Enhancing Financial Innovation & Access (EFInA, 2020), approximately 36% of Nigerian adults are financially excluded. The e-Naira aims to address this gap by providing a digital financial platform that is accessible to all citizens, including those in remote and underserved areas. The digital currency can be accessed via mobile phones, which are widely used across Nigeria, thus offering a convenient and cost-effective means for individuals to participate in the financial system (Adeniran, 2021).
Another significant benefit of the e-Naira is the reduction in transaction costs. Traditional banking systems often involve high fees for various services, which can be a barrier for low-income individuals. The e-Naira, being a digital currency, eliminates the need for physical infrastructure and intermediaries, thereby reducing the costs associated with financial transactions (Ogunleye, 2021). This cost reduction can encourage more people to engage in financial activities, such as savings, investments, and remittances, ultimately contributing to economic growth.
The e-Naira also promises to improve the efficiency and transparency of the monetary system. Digital currencies are inherently traceable, which can help in reducing fraud and corruption. The CBN has emphasized that the e-Naira will have robust security features to protect users’ data and transactions (Central Bank of Nigeria, 2021). This increased transparency can enhance trust in the financial system and encourage more people to use formal financial services (Okoye & Eze, 2021).
Moreover, the e-Naira can facilitate faster and more efficient cross-border transactions. Remittances from the Nigerian diaspora are a significant source of income for many households. Traditional remittance channels can be slow and expensive, but the e-Naira offers a quicker and cheaper alternative. According to a study by the World Bank (2021), digital currencies can reduce the cost of remittances by up to 50%, making it easier for families to receive financial support from abroad.
However, the implementation of the e-Naira is not without challenges. Issues such as digital literacy, cybersecurity, and regulatory compliance need to be addressed to ensure the successful adoption of the digital currency. A study by Akinola (2021) highlights the importance of public awareness campaigns and education programs to help citizens understand and use the e-Naira effectively. Additionally, robust cybersecurity measures are essential to protect against potential threats and ensure the integrity of the digital currency system.
In conclusion, the e-Naira platform holds significant potential benefits for Nigerian citizens, including enhanced financial inclusion, reduced transaction costs, improved efficiency and transparency, and more efficient cross-border transactions. However, realizing these benefits requires addressing various challenges related to digital literacy, cybersecurity, and regulatory compliance. Continued research and collaboration among stakeholders are essential to maximize the positive impact of the e-Naira on Nigeria’s financial system and its citizens.
1.2 Statement Of The Problem
The Nigerian Naira was introduced to replace the Nigerian pound in 1973 (Central Bank of Nigeria, 2000). The coins of the new currency were the first coins issued by an independent Nigeria before the introduction of Naira notes in 1973. However, the use of Naira notes in Nigeria has not been favourable to individuals and businesses in the country. This is as a result of the high rate of printing and use of counterfeit Naira notes in society, as well as the rate of armed robbery. This phenomenon has raised public concern, as individuals and businesses suffer immensely as a result of this menace. According to Adebayo (2000), adopting a cashless policy and exploring global technological advancement by developing a non-physical but acceptable legal tender will serve as a strategy for curtailing the increasing use of counterfeit notes and physical money theft.
From the aforementioned, and the expanding use of digital money, various governments across the world (Nigeria inclusive) have shown an interest in developing a digital currency with the CBDC emerging as a starting point for Nigeria, considering its economic and non-economic benefits. In other words, CBN has provided to the Nigerian society the e-Naira platform, hence adopting the digital currency dispensation (Emeka, 2021). The development of this system will minimize the use of Naira notes and physical carrying of cash.
Additionally, e-Naira was built to allow rapid transactions, cheap diaspora remittance, direct government help, easier local payments, and secured banking. According to CBN, “eNaira was created with residents’ needs in mind, as they recognise that citizens are individuals whose demands are always growing. Hence, there is a need for the method of supplying customised solutions to constantly evolve ((Emeka, 2021). From functionality, call to action, to user interface, the goal has always been to create an amazing digital experience customized to citizens’ needs.
Further, the platform assures that government financial aid reaches the right individuals from the comfort of their locations. More-so, eNaira makes it feasible to send funds, save money, and save time while at it. This study, therefore, is set to meticulously analyze the effectiveness of the acclaimed service provided by the eNaira platform.
1.3 Objective Of The Study
The primary aim of this study is to critically examine the benefit of the eNaira platform to Nigerian citizens. Specifically, the study is set to;
- Unveil the various ways in which eNaira will significantly be useful to Nigerian citizens.
- Determine if standards of eNaira services will promote the financial activities of citizens better compared to banking services.
- Ascertain if Nigerian citizens can perform local and foreign investments through the eNaira platform.
1.4 Research Question
The study will be guided by the following questions:
- What are the various ways in which eNaira will significantly be useful to Nigerian citizens?
- Will the standards of eNaira services promote the financial activities of citizens better compared to banking services?
- Can Nigerians perform local and foreign investments through the eNaira platform?
1.5. Research Hypothesis
The hypothetical statement of the study is buttressed below:
Ho: eNaira platform will not benefit Nigerian citizens
H1: eNaira platform will benefit Nigerian citizens
1.6 Significance of The Study
The study will be most relevant to the Nigerian populace who are yet to secure an account on the eNaira platform. The study will, through the results of its findings, enlighten Nigerians on the possible opportunities that exist on the eNaira platform and the need to explore the services offered by the system. However, since the study is channeled towards obtaining and analyzing public perception on the eNaira digital currency, the study will therefore in respect to the opinions of citizens, apprise the Nigeria government and the CBN on perception of the populace about the newly developed platform.
Additionally, the study will serve as a source of information to researchers, students and other academic inclined individuals who may be carrying out research on a related topic.
1.7 Scope Of The Study
Generally, the study is set to critically investigate the benefit of e-Naira to Nigeria citizens. In furtherance, the study will unveil the various ways in which eNaira will significantly be useful to Nigerian citizens, determine if the standards of eNaira services will promote the financial activities of citizens better compared to banking services, and ascertain if Nigerian citizens can perform local and foreign investments through the eNaira platform. The respondents for this study will be obtained from selected Nigerians in Benin, Edo State, Nigeria.
1.8. Limitations Of The Study
In the course of carrying out this study, the researcher experienced some constraints, which included time constraints, financial constraints, language barriers, and the attitude of the respondents.
In addition, there was the element of researcher bias. Here, the researcher possessed some biases that may have been reflected in the way the data was collected, the type of people interviewed or sampled, and how the data gathered was interpreted thereafter. The potential for all this to influence the findings and conclusions could not be downplayed.
More so, the findings of this study are limited to the sample population in the study area, hence they may not be suitable for use in comparison to other schools, local governments, states, and other countries in the world.
1.9 Definition Of Terms
Naira: This is the basic monetary unit of Nigeria.
Digital Currency: Digital currencies are monies that exist not in physical form but only as electronic data, but perform the basic functions of money being unit of account, store of value and means of exchange.
eNaira: eNaira is the name given to the CBN’s first proposed digital currency.
Project – A CRITICAL EXAMINATION OF THE BENEFIT OF E-NAIRA PLATFORM TO NIGERIA CITIZENS